U.S. Beverages Scanner Update: Soft drinks remain resilient, with KDP standing out

Overview

This report is Bernstein's Q3 QTD scanner data update for the U.S. beverages, household, and personal care products sectors, covering the latest period through 2026-07-11 and comparing it with Q2 and Q1. The report's core conclusion is that U.S. beverage category growth has slowed from the prior two quarters, but soft drinks and functional beverages remain resilient, with significant divergence among covered companies. Keurig Dr Pepper is one of the strongest companies in the coverage universe, Coca-Cola remains solid, PepsiCo is pressured by weakness in both beverages and foods, and Monster and Celsius continue to grow in energy beverages but show divergent brand performance.

Core views

The core views are: first, U.S. beverage category growth slowed to +3.3% in Q3 QTD from +4.0% in Q2 and +6.0% in Q1, but did not stall; second, KDP achieved +9.1% sales growth through its energy beverage, sports drink, and functional beverage portfolio, along with a 0.6 percentage-point market-share gain; third, Coca-Cola delivered solid growth through soft drinks and Fairlife, while PepsiCo's North American business faces pressure from category health and share losses; fourth, energy beverage brands are diverging, with the core Monster brand growing strongly and Celsius growth driven by Alani while the traditional Celsius brand declined.

Analysis framework

The report uses retail scanner data to track year-over-year sales growth, volume growth, market-share changes, and rolling 12-week trends across beverage and related food subcategories, comparing Q3 QTD, Q2, and Q1 performance. The investment assessment additionally incorporates company fundamentals, category health, brand portfolios, market-share changes, EPS forecasts, target P/E multiples, EV/EBIT cross-checks, and DCF valuation sensitivity.

Methodology notes

• channel_datascanner_data_update

  Retail scanner data

  Measures beverage category and company-segment sales, volume, and market-share performance using Q3 QTD scanner data through 2026-07-11, compared with Q2 and Q1.

• Valuation methodsp_e_multiple

  Target P/E valuation

  KDP valuation uses NTM+1 EPS of $2.58 and a 15.0x P/E multiple to derive a $39 target price, cross-checked using EV/EBIT and DCF.

• Valuation methodsev_ebit_and_dcf_cross_check

  EV/EBIT and DCF cross-check

  The report uses EV/EBIT and DCF as target-price validation frameworks for covered companies, with valuation sensitivity driven primarily by organic sales growth, WACC, and long-term growth assumptions.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• KDP.US / KEURIG DR PEPPER INC

  One of the report's primary covered companies and identified by the input entity as the core asset.

  Strengths

  Q3 QTD sales growth of +9.1%, with energy beverages and sports drinks growing +40.9% and +26.1%, respectively; a strong functional beverage portfolio; and a 0.6 percentage-point market-share gain.

  Weaknesses

  The company remains in a challenging integration phase, and execution and integration risks cannot be ignored.

  Comparison

  Growth is significantly stronger than PepsiCo's and above Coca-Cola's +5.2% among covered companies; Bernstein assigns an Outperform rating.

  Risks

  Declining consumer demand, competition-driven share losses, tighter regulation, commodity costs and foreign-exchange volatility, and changes in M&A or cash-allocation priorities.

• KO.US / Coca-Cola Co

  Covered beverage peer and comparison asset.

  Strengths

  Q3 QTD sales growth of +5.2%, volume growth of +3.0%, soft drink growth of +7.4%, and Fairlife growth of +24.2% with a 2.7 percentage-point category-share gain.

  Weaknesses

  The Latin American business is affected by Mexico's 2026 consumption tax, which could pressure consumption and pricing realization.

  Comparison

  Growth is solid, but the rating is Market-Perform, below KDP's Outperform investment rating.

  Risks

  Tighter soft drink regulation, changing consumer preferences, commodity costs and foreign-exchange volatility, and changes in M&A or cash-allocation priorities.

• PEP.US / PepsiCo Inc

  Covered beverage and food peer and negative comparison.

  Strengths

  International operations are healthy and productive, while energy beverages continue to grow at +6.9%.

  Weaknesses

  Q3 QTD sales declined 1.1%, with beverages down 0.7% and foods down 1.5%; North American category health and share performance are under pressure.

  Comparison

  Momentum is weaker among covered companies; the rating is Market-Perform, clearly behind KDP.

  Risks

  Tighter regulation of soft drinks or salty snacks, changing consumer preferences, commodity costs and foreign-exchange volatility, and changes in M&A or cash-allocation priorities.

• CELH.US / Celsius Holdings Inc

  Covered energy beverage peer.

  Strengths

  Q3 QTD growth of +7.7%, with Alani growing +42.4%; Bernstein believes Alani has high repeat-purchase rates and room to improve brand awareness.

  Weaknesses

  The traditional Celsius brand declined 8.7%, making growth dependent on Alani.

  Comparison

  Rated Outperform with a $44 target price; it shares the more positive rating with KDP, although KDP's growth is broader.

  Risks

  Declining consumer demand, market-share losses, tighter energy beverage regulation, commodity costs and foreign-exchange volatility, and changes in M&A or cash-allocation priorities.

• MNST.US / Monster Beverage Corp

  Covered energy beverage peer.

  Strengths

  Q3 QTD growth of +8.4%, with the core Monster brand growing +13.6%; international operations are supported by Coca-Cola's distribution network.

  Weaknesses

  Competition in the U.S. energy beverage market is intense, and growth must continue to rely on brand-portfolio execution and international share gains.

  Comparison

  Rated Market-Perform with a $95 target price; fundamentals are strong, but its relative investment rating is less favorable than KDP's.

  Risks

  Market-share changes, tighter regulation, changing consumer preferences, commodity costs and foreign-exchange volatility, and changes in M&A or cash-allocation priorities.

Key data

• U.S. beverage category Q3 QTD growth+3.3%Through 2026-07-11, below +4.0% in Q2 and +6.0% in Q1.
• KDP Q3 QTD sales growth+9.1%Above +8.8% in Q2 and among the strongest performances in the coverage universe.
• KDP energy beverage growth+40.9%One of the primary drivers of KDP's broad-based growth.
• KDP sports drink growth+26.1%Shows continued strong demand for its functional and hydration-related portfolio.
• KDP market-share change+0.6 percentage pointsYear-over-year market-share gain.
• Coca-Cola Q3 QTD sales growth+5.2%Driven by +3.0% volume growth and continued share gains.
• PepsiCo Q3 QTD sales growth-1.1%Beverages declined 0.7% and foods declined 1.5%.
• Monster Q3 QTD growth+8.4%The core Monster brand grew +13.6%.
• Celsius Q3 QTD growth+7.7%Alani grew +42.4%, while the traditional Celsius brand declined 8.7%.
• KDP target price$39Bernstein assigns an Outperform rating using a 15.0x target P/E multiple.

Impact & implications

The investment implication is that although U.S. beverage demand has moderated at the margin, soft drinks, energy beverages, sports drinks, and functional beverages continue to support revenue resilience at high-quality companies. KDP's functional beverage portfolio and share gains make it more attractive than companies with weaker North American momentum such as PepsiCo; Coca-Cola has higher quality, but valuation and regional risks support a Market-Perform rating; energy beverages remain a structurally growing segment, while Celsius's internal brand divergence and Monster's international capabilities will determine relative performance.

Risks

• U.S. consumers affected by inflation, unemployment, or macroeconomic pressure may reduce demand for beverages and snacks.
• Energy beverages and soft drinks face the risk of tighter government regulation.
• Intensifying competition could lead to market-share losses for KDP, CELH, MNST, KO, or PEP.
• Commodity costs and foreign-exchange volatility could compress margins.
• Changes in consumer preferences driven by health or environmental considerations could weaken demand for traditional soft drinks or energy beverages.
• Changes in companies' M&A stance or cash-allocation priorities could affect valuation and shareholder returns.
• KDP's integration process still carries execution risk; an unsuccessful integration could undermine the Outperform thesis.

What to watch

• Whether U.S. beverage category year-over-year growth continues to slow from +3.3% in the next scanner period.
• Whether KDP can sustain high growth in energy beverages and sports drinks, and whether its 0.6 percentage-point share gain expands.
• Whether Coca-Cola's soft drink volume and Fairlife share gains continue.
• Whether PepsiCo's North American beverage and food businesses stabilize, particularly in soft drinks, sports drinks, and salty snacks.
• Whether Alani's rapid growth within Celsius can offset the decline of the traditional Celsius brand.
• Whether growth in Monster's core brand and international market-share gains continue.
• The impact of Mexico's 2026 consumption tax on Coca-Cola's Latin American consumption and pricing realization.